Forbes v Townsend
| Jurisdiction | New Zealand |
| Judge | Associate Judge Paulsen |
| Judgment Date | 15 September 2023 |
| Neutral Citation | [2023] NZHC 2578 |
| Court | High Court |
| Docket Number | CIV-2023-404-665 |
[2023] NZHC 2578
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Associate Judge Paulsen
CIV-2023-404-665
UNDER the Contract and Commercial Law Act 2017
S C Price and R G Muston for Plaintiffs
P C Murray for Defendants
Contract, Leaky Buildings — summary judgment application for damages for misrepresentation to recover the costs of the repairs to a leaky building — summary judgment principles — whether a nominee could bring a claim for pre-contractual misrepresentation — effect of building report and reasonable reliance on the misrepresentation — Contract and Commercial Law Act 2017
This judgment was delivered by me on 15 September 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
The first named plaintiff, Grant Forbes, entered into an agreement to purchase a residential property at Remuera, Auckland from the defendants. Before settlement, Mr Forbes nominated the plaintiffs as purchasers, and they settled and took title. Subsequently, leaks and consequential damage were identified at the property and the plaintiffs undertook repairs.
The plaintiffs' claim is advanced on the basis the defendants misrepresented that there had been no leaks or watertightness issues at the property. The plaintiffs say there were significant leaks and watertightness issues of which the defendants were aware. They seek damages under s 35 of the Contract and Commercial Law Act 2017 (CCA) to recover the costs of the repairs. The application before me seeks summary judgment on the claim as to liability only.
The defendants deny liability. They say that:
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(a) as nominees, the plaintiffs cannot bring a claim for an alleged pre- contractual misrepresentation under s 35 of the CCA;
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(b) the representation made was not false;
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(c) Mr Forbes was not induced to enter into the agreement by the representation, and, if he was, his reliance upon it was not reasonable; and
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(d) the issues of liability and quantum are so interlinked that summary judgment is not appropriate in any event.
The plaintiffs are the trustees of the Assurer Trust.
The trustees of the Erskine Trust were the owners of 93 Victoria Avenue, Remuera, Auckland from November 2010 until 24 January 2020. The house was built in around 1994. The property was occupied by the first named defendant, Sarah Townsend, as her home.
While the property was owned by the defendants, there were leaks and other watertightness issues with the property. Ms Townsend acknowledges this but recounts steps she took to repair and maintain the property, including steps taken to ensure it was fit for sale.
In late 2019, the property was put on the market for sale by auction. Mr Forbes and his wife inspected the property. They also engaged Whats Up House Inspections Ltd to provide a builder's report.
The auction was brought forward to 8 November 2019 because the defendants had received an offer from another interested party. Between 4 November 2019 and 8 November 2019, Mrs Forbes had email correspondence with the defendants' agent, Vicki Wallace of Bayleys Real Estate Ltd. She raised several queries in respect to the property.
Mr and Mrs Forbes received the builder's report the day before the auction. It is a comprehensive document, running to more than 50 pages. It raised some potential issues with leaks and noted some damp moisture readings. It also identified some weathertightness risk factors.
At 9.49 am on 8 November 2019, Mrs Forbes sent an email to Ms Wallace, which included the following request:
Please confirm by return email that there haven't been any leaks or water tightness issues that we should be aware of?
At 10.46 am, Ms Wallace responded:
Sarah confirms no leaks to her knowledge.
There is no dispute that “Sarah” refers to Ms Townsend.
Mr Forbes was the successful bidder at auction. He entered into an agreement to purchase the property. On the agreement, the purchaser is named as “Grant Forbes and/or nominee (‘the Purchaser’)”.
On 21 January 2020, Mr Forbes and the plaintiffs, as trustees of the Assurer Trust (including Mr Forbes), entered into a deed of nomination whereby the plaintiffs accepted nomination as purchaser under the agreement. The defendants were not parties to that deed.
Settlement occurred on 24 January 2020, and the plaintiffs obtained title on that day.
In September and October 2021, water ingress and leaks were discovered at the property. Soundhomes NZ Ltd, a weathertight home specialist, was engaged to inspect the property. It provided a report which identified a range of weathertightness defects and water damage. It also identified that the property had historically leaked. The plaintiffs undertook remedial works.
On 24 August 2022, the plaintiffs gave notice of their claim to Ms Townsend. The claim was advanced, as it is in this proceeding, on the basis the plaintiffs are entitled under s 35 of the CCA to damages for Ms Townsend's misrepresentation that there were no leaks and had not been any leaks on the property to Ms Townsend's knowledge.
The relevant rule is r 12.2 of the High Court Rules 2016 which reads as follows:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.
[19] The principles that apply to a plaintiff's summary judgment application were summarised by Associate Judge Osborne in Mount Grey Downs Ltd v Pinot Properties Ltd as follows: 1
(a) Commonsense, flexibility and a sense of justice are required.
(b) The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
(c) The Court will not hesitate to decide questions of law where appropriate.
(d) The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements in affidavits.
(e) In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
(f) In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.
(g) In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.
(h) The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.
(i) Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.
Section 35(1) of the CCA provides as follows:
35 Damages for misrepresentation
(1) If a party to a contract ( A) has been induced to enter into the contract by a misrepresentation, whether innocent or fraudulent, made to A by or on behalf of another party to that contract ( B),—
(a) A is entitled to damages from B in the same manner and to the same extent as if the representation were a term of the contract that has been breached; and
(b) A is not, in the case of a fraudulent misrepresentation, or of an innocent misrepresentation made negligently, entitled to damages from B for deceit or negligence in respect of the misrepresentation.
Nominees wishing to enforce contract terms must normally rely upon ss 12 and 17 of the CCA.
Section 12 provides:
12 Deed or contract for benefit of person who is not party to deed or contract
(1) This section applies to a promise contained in a deed or contract that confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract.
(2) The promisor is under an obligation, enforceable by the beneficiary, to perform the promise.
(3) This section applies whether or not the person referred to in subsection (1) is in existence when the deed or contract is made.
Section 17 provides:
17 Enforcement by beneficiary
(1) The obligation imposed on a promisor by section 12 may be enforced by the beneficiary as if the beneficiary were a party to the deed or contract.
(2) Relief in respect of the promise may not be refused on the ground—
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